The Copeland family has failed in its efforts to breathe life back into their namesake sporting goods retail operation and have succumbed to the realities of the marketplace. Those efforts included a Chapter 11 bankruptcy filing in August to keep the business afloat after the family moved to re-acquire the business they sold to a private equity firm in December 2002. Last week, the retailer announced they had entered into an agreement with a joint venture led by The Sports Authority to acquire the remaining assets of the business.
The family made the decision after concluding that a turnaround was unlikely, given that key vendors, such as Nike and Titleist, were not shipping them product. That reality, along with other issues, led them to the decision to either sell or liquidate the business in time for the upcoming Thanksgiving holiday so as to maximize the value of the assets.
Based on court documents obtained by Sports Executive Weekly, the joint venture, which is composed of The Sports Authority, Hilco Real Estate, LLC, and Hilco Merchant Resources, LLC, will pay $21.7 million for the stores, but that offer is predicated on the inventory being valued at $23 million, with certain adjustments up or down at 80 cents for each dollar of variance above or below the $23 million mark. The JV beat out a bid by Great American Group, the liquidator that has been managing GOB sales at eleven Copelands stores, which called for $18 million in guaranteed compensation and predicated on $25 million of value cost inventory.
The deal calls for TSA to acquire 13 Copelands leases and for the Hilco partners to acquire lease designation rights for all other leases and to conduct GOB sales at all locations, including the TSA locations. The deal includes all offices and warehouses in San Luis Obispo as well.
Bids for the assets are due on November 13, with the 363 auction scheduled for November 15 and the sale hearing slated to occur on November 17. TSA and Hilco have been granted Stalking Horse status in the bidding process and are eligible for a $630,000 break-up fee and up to $150,000 in expenses should the deal not go forward.
Copelands said it believes The Sports Authority plans to retain many of the current employees working at the Company's retail stores. In their view, the proposed sale is the best available means of keeping as many of its facilities open as possible. Sale of its business as a “going concern” should maximize the value of its assets and operations for the benefit of its creditors and help preserve jobs for company employees.
